A judgment against Illinois for not paying union members’ automatic raises is going to put lawmakers and Gov. Bruce Rauner under even greater pressure to work out a balanced budget.
The Illinois’ Supreme Court recently decided it would not take up Rauner’s appeal of a lower court ruling that the state has to pay thousands of members of the American Federation of State, County and Municipal Employees Council 31 their automatic raises, called step increases. Rauner and lawmakers now have to figure out how to pay for those pay hikes that have been accumulating since summer 2015.
Rauner’s office won’t give any figures about how much the judgment will cost the state, but analyses of public payrolls estimate the cost to be $400 million over four years.
“About 40 percent of AFSCME employees are step eligible,” said Ted Dabrowski, president of financial watchdog Wirepoints. “When you include the cost of a higher salary and add the Social Security cost and other costs over four years, you’re talking about a $400 million increase in the cost of AFSCME employees over that time period.”
Rauner’s office would not corroborate that figure.
“Many of these issues will be addressed here in the coming months,” the governor said. “In the budget proposal I made, we had a $350 million surplus to be used to pay down the bill backlog.”
That surplus hinges on Rauner’s proposal to shift teacher pension costs back to local school districts over four years, a plan that’s not likely to get General Assembly approval.
Moody’s Investors Services addressed the court ruling in a newsletter, noting that a requirement to pay all of the money already earned “could erode much of a $351 million projected surplus” Rauner projects. It could also, the report said, cause budget pressure in the Fiscal Year 2020 budget, when those increases translate into higher pension costs.
Because it’s been nearly three years since the state suspended those pay hikes, it’s possible that the Illinois Labor Relations Board could instruct the state to pay all of the money that’s owed to the union employees immediately.
“It’ll be yet another factor that could put pressure on the state to consider new revenue sources,” Moody’s analyst Ted Hampton said.
The state’s bill backlog is estimated to be $7.7 billion by June 30.
The judgment of how much the state will owe and when is still months away. The Supreme Court will officially remand Rauner’s appeal back to the appellate court that ruled against him on April 25, per an official with the Illinois Labor Relations Board. The appellate court would then have an unspecified time to hand the matter over to the ILRB with instruction to decide just how much and when the state should pay the workers.
Rauner’s office and union negotiators are still at odds over a contract stemming back to July 2015, when their last one expired. They’ve since been working on provisional contracts. Rauner has tried, unsuccessfully via the courts, to have their negotiations declared at impasse. He could then impose his last and final offer, a move he says would save the state substantially.
[****This story is from Illinois Radio Network News.]
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